THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
AGREEMENT OF AGENCY
Agreement made this _________ day of ________by and between ___________________
("Principal") and __________________ ("Agent ").
1. The undersigned is presently an Agent in accordance with an
Agreement of Agency ("Guardian Life Agency Agreement") with the
Principal named above, endorsed by The Guardian Life Insurance
Company of America ("Guardian Life") and bearing an effective date
of _________________.
2. The Principal hereby appoints the Agent with the endorsement of The
Guardian Insurance & Annuity Company, Inc. ("GIAC"), a Delaware
Corporation and a wholly-owned subsidiary of Guardian Life, for the
limited purpose of soliciting applications for GIAC's Variable Whole
Life Insurance Policies with Modified Scheduled Premiums marketed
under the name Park Avenue Life ("PAL") and GIAC's Flexible Premium
Variable Universal Life Policies marketed under the name Park Avenue
VUL ("VUL"). There may be one or more policies marketed under the
PAL name. Where necessary or appropriate, this Agreement will
distinguish between them by appending the year of introduction.
Currently, there are two policies marketed under this name - "PAL
`95 and PAL `97."
3. The Agent shall at all times be associated with Guardian Investor
Services Corporation ("GISC"), a Broker-Dealer registered with the
Securities and Exchange Commission ("SEC") and a member of the
National Association of Securities Dealers, Inc. ("NASD") as an NASD
Registered Representative or NASD Registered Principal and, if the
particular jurisdiction requires, shall be licensed or registered as
a securities agent of GISC. The Agent must at all times be validly
licensed, registered or appointed by GIAC as a variable contracts
agent in accordance with the requirements of the jurisdiction where
solicitations for PAL and VUL contracts occur. The Agent may solicit
for and sell PAL and VUL contracts in any jurisdiction where such
contracts are filed and approved for sale by the governmental
authorities having jurisdiction, provided the Agent is validly
licensed, registered or otherwise qualified as required for the
solicitation and sale of the PAL and VUL contracts in such
jurisdictions.
1
4. To the extent applicable, the Agent shall comply strictly with: (a)
the laws, rules and regulations of all jurisdictions (state and
local) in which the Agent solicits applications for and sells PAL
and VUL contracts; (b) federal laws and the rules, regulations of
the SEC; (c) the rules of the NASD; (d) the rules and procedures of
GISC, and (e) the rules and procedures of GIAC. The Agent
understands that failure to comply with such laws, rules,
regulations and procedures may result in disciplinary action against
the Agent by the SEC, a state or other local regulatory agency that
has jurisdiction, the NASD, GISC and GIAC. Before any solicitations
or sales of PAL and VUL are made, the Agent shall become familiar
with and abide by the laws, rules, regulations and procedures of all
of the above mentioned agencies or parties as are currently in
effect and as they may be changed from time to time.
5. The Agent shall have all applications for PAL and VUL accurately
completed or reviewed and signed by the applicant and shall submit
the applications to GIAC through GISC together with all payments
received from applicants without any reductions. The Agent shall
cause all checks or orders for PAL and VUL to be made payable to
GIAC. GIAC shall reject any application that is submitted by or on
behalf of an Agent not appropriately licensed as required by
paragraph 3 of this Agreement.
6. The Agent shall not make any statements concerning PAL and VUL
except those that are contained in the current prospectuses for PAL
and VUL and the prospectuses for their underlying variable
investment options and shall not solicit for applications or make
sales through the use of mailings, advertisements or sales
literature or any other method of contact unless the material or a
complete description of the method has been filed with the NASD and
received written Approval of GISC from a Registered Principal whose
office is located in a GISC Office of Supervisory Jurisdiction as
that term is defined by NASD rules.
7. In connection with the Agent's appointment for the purpose set forth
in paragraph 2 above, the entire Guardian Life Agency Agreement
referred to above and attached hereto as the Exhibit, including all
compensation adjustment and service fee provisions, is incorporated
herein by reference. All references to "Company"
2
within the Guardian Life Agency Agreement shall apply with full
force and effect to GIAC. Additionally, the Registered
Representative's Agreement between the Agent and GISC and the
Agent's Agreement between the Agent and GIAC are incorporated herein
by reference and attached hereto as Exhibits.
8. The Agent shall be paid commissions on PAL as outlined in Appendix A
of this Agreement.
9. The Agent shall be paid commissions on VUL as outlined in Appendix B
of this Agreement.
10. Allocation of VUL premiums and the effect thereof on compensation is
described in Appendix C of this Agreement.
11. It shall be understood that this Agreement is automatically
terminated if the Guardian Life Agency Agreement, GISC Registered
Representative Agreement or GIAC Agent's Agreement is terminated.
IT SHALL BE EXPRESSLY UNDERSTOOD BY THE AGENT THAT THIS AGREEMENT SHALL NOT BE
EFFECTIVE UNLESS THE AGENT IS VALIDLY LICENSED IN ACCORDANCE WITH THE
REQUIREMENTS OF THE JURISDICTIONS WHERE SOLICITATIONS FOR PAL AND VUL POLICIES
OCCUR.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
----------------------------- ---------------------------------
WITNESS PRINCIPAL
----------------------------- ---------------------------------
WITNESS AGENT
3
APPENDIX A
A. Commission Schedule (Percentages of Premium)
---------------------------------------------------------
Policy Years Policy Premiums Unscheduled Payments
---------------------------------------------------------
1 50% 3%
---------------------------------------------------------
2 through 10 5% 3%
---------------------------------------------------------
The first policy year commission rate of 50% on policy premiums shall be reduced
where policies are issued at ages over 70 with actual rates payable determined
by deducting from the figure 120 ages of applicable insureds as of policy issue
dates.
No compensation shall be payable on PAL policy premiums skipped under the
Premium Skip Option of PAL policies. If unscheduled payments are received when
policies should be on the Premium Skip Option, renewal commissions on such
payments shall be based on renewal rates of PAL policy premiums applied up to
amounts of premium that correspond to renewal PAL policy premiums that would
otherwise have been paid if not for the Premium Skip Option being in effect with
standard renewal rates on unscheduled payments applied to any premiums received
above such PAL policy premium levels.
B. First Policy Year Commission Chargebacks on PAL `95 Policies
First policy year commissions on policy premiums shall be charged back to the
Agent on PAL `95 policies that are surrendered or lapsed prior to the policies
having been in force for at least eighteen months in accordance with the
following:
------------------------------------------------------------------------
Policy Months of PAL x00 Xxxxxxxxxx or Lapses Chargeback Percentages
------------------------------------------------------------------------
1-3 75%
------------------------------------------------------------------------
4-6 70%
------------------------------------------------------------------------
7-10 65%
------------------------------------------------------------------------
11-13 55%
------------------------------------------------------------------------
14 50%
------------------------------------------------------------------------
15 40%
------------------------------------------------------------------------
16 30%
------------------------------------------------------------------------
17 20%
------------------------------------------------------------------------
18 10%
------------------------------------------------------------------------
4
APPENDIX A (CONTINUED)
PAL chargebacks not immediately repaid on demand by the Agent to the Principal
(or to the Company if the Company should be the Principal) shall constitute an
indebtedness under the terms of the Guardian Life Agency Agreement.
5
APPENDIX B
A. Commission Schedule (Percentages of Premium)
-----------------------------------------------------
Policy Years Target Premiums Excess Premiums
-----------------------------------------------------
1 45% 3%
-----------------------------------------------------
2 through 10 3% 3%
-----------------------------------------------------
6
APPENDIX C
ALLOCATION OF PREMIUMS AND THEIR EFFECT ON COMPENSATION
A. General
In a first policy year, premiums will first be applied to policy target
premium. These will be compensated at first year rates. Any premiums
received in the first year of a policy exceeding policy target premium
will be considered excess premium to be compensated at excess rates.
In policy years 2 through 10, any premium received up to nine times policy
target premium will be applied as policy target premium and receive
compensation at target premium renewal rates. Any premium exceeding nine
times policy target premium in policy years two through ten will be
considered excess premium to be compensated at excess rates.
In policy years 11 and greater, the compensation on premium received will
be at service fee rates.
B. Increases In Coverage
Coverage increases will be reflected in self-contained segments of
policies that have their own policy effective dates, policy year durations
and policy premiums. Premiums for policies with increases in coverage will
be applied to each coverage and associated target premiums in the order
the coverages were issued (earliest first). When the sum of the premiums
during a given policy year exceeds the sum of all applicable target
premiums, any additional amount will be allocated prorata based on target
premiums for each coverage. The amount thus allocated will be processed as
outlined in the above general description (i.e. it will be processed with
reference to policy years of the coverages and amounts of applicable
target premiums paid).
C. Decreases In Coverage
A coverage decrease will be applied to a last previous coverage increase,
if any, or to the initial coverage should no coverage increase have taken
place. Such decrease will serve to reduce target premium for the full
period so that any regular
7
APPENDIX C (CONTINUED)
compensation on subsequent premium received will be based on lower target
premium (i.e. The total of renewal compensation payable will be based on
nine times the lower target premium). Any premium amount applied over such
lower target premium will be compensated at excess rates for policy years
2 through 10 and at service fee rates for policy years 11 and greater.
First year compensation will be paid on coverage increases only to the
extent such increases should exceed previous coverage decreases.
8
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
FIELD REPRESENTATIVE AGREEMENT
Agreement made this _________ day of ________ by and between The Guardian
Insurance & Annuity Company, Inc. ("GIAC"), a Delaware corporation and a
wholly-owned subsidiary of The Guardian Life Insurance Company of America
("Guardian Life"), having its principal office located at 000 Xxxx Xxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000 and ___________________ ("Field Representative"). .
1. The undersigned is presently a Field Representative of Guardian Life
in accordance with a Field Representative Agreement bearing an
effective date of ___________________("Guardian Life FR Agreement").
2. GIAC hereby appoints the Field Representative for the limited
purpose of soliciting applications for GIAC's Variable Whole Life
Insurance Policies with Modified Scheduled Premiums marketed under
the name Park Avenue Life ("PAL") and GIAC's Flexible Premium
Variable Universal Life Policies marketed under the name Park Avenue
VUL ("VUL"). There may be one or more policies marketed under the
PAL name. Where necessary or appropriate, this Agreement will
distinguish between them by appending the year of introduction.
Currently, there are two policies marketed under this name -- "PAL
`95 and PAL `97."
3. The Field Representative shall at all times be associated with
Guardian Investor Services corporation ("GISC"), a Broker-Dealer
registered with the Securities and Exchange Commission ("SEC") and a
member of the National Association of Securities Dealers, Inc.
("NASD") as an NASD Registered Representative or NASD Registered
Principal and, if the particular jurisdiction requires, shall be
licensed or registered as a securities agent of GISC. The Field
Representative must at all times be validly licensed, registered or
appointed by GIAC as a variable contracts agent in accordance with
the requirements of the jurisdiction where solicitations for PAL and
VUL contracts occur. The Field Representative may solicit for and
sell PAL and VUL contracts in any jurisdiction where such contracts
are filed and approved for sale by the governmental authorities
having jurisdiction, provided the Field Representative is validly
licensed, registered or otherwise qualified as required for the
solicitation and sale of the PAL and VUL contracts in such
jurisdictions.
1
4. To the extent applicable, the Field Representative shall comply
strictly with: (a) the laws, rules and regulations of all
jurisdictions (state and local) in which the Field Representative
solicits applications for and sells PAL and VUL contracts; (b)
federal laws and the rules, regulations of the SEC; (c) the rules of
the NASD; (d) the rules and procedures of GISC, and (e) the rules
and procedures of GIAC. The Field Representative understands that
failure to comply with such laws, rules, regulations and procedures
may result in disciplinary action against the Field Representative
by the SEC, a state or other local regulatory agency that has
jurisdiction, the NASD, GISC and GIAC. Before any solicitations or
sales of PAL and VUL are made, the Field Representative shall become
familiar with and abide by the laws, rules, regulations and
procedures of all of the above mentioned agencies or parties as are
currently in effect and as they may be changed from time to time.
5. The Field Representative shall have all applications for PAL and VUL
accurately completed or reviewed and signed by the applicant and
shall submit the applications to GIAC through GISC together with all
payments received from applicants without any reductions. The Field
Representative shall cause all checks or orders for PAL and VUL to
be made payable to GIAC. GIAC shall reject any application that is
submitted by or on behalf of a Field Representative not
appropriately licensed as required by paragraph 3 of this Agreement.
6. The Field Representative shall not make any statements concerning
PAL and VUL except those that are contained in the current
prospectuses for PAL and VUL and the prospectuses for their
underlying variable investment options and shall not solicit for
applications or make sales through the use of mailings,
advertisements or sales literature or any other method of contact
unless the material or a complete description of the method has been
filed with the NASD and received written Approval of GISC from a
Registered Principal whose office is located in a GISC Office of
Supervisory Jurisdiction as that term is defined by NASD rules.
7. In connection with the appointment of the undersigned as a GIAC
Field Representative for the purpose set forth in paragraph 2 above,
the entire Guardian Life FR Agreement referred to above and attached
2
hereto as the Exhibit, including all compensation adjustment and
service fee provisions, is incorporated herein by reference.
Guardian Life FR Agreement compensation provisions that do not apply
to PAL and VUL are as noted below. All references to "Company"
within the Guardian Life Agency Agreement shall apply with full
force and effect to GIAC. Additionally, the Registered
Representative's Agreement between the Field Representative and GISC
and the Agent's Agreement between the Field Representative and GIAC
are incorporated herein by reference and attached hereto as
Exhibits.
8. Field Representative compensation on PAL is described in Appendix A
of the Agreement.
9. Field Representative compensation on VUL is described in Appendix B
of this Agreement.
10. Allocation of VUL premiums and the effect thereof on compensation is
described in Appendix C of this Agreement.
11. This Agreement may be terminated as outlined in Paragraph 14 of the
Guardian Life FR Agreement. In addition, it shall be automatically
terminated if the Guardian Life FR Agreement, GISC Registered
Representative Agreement or GIAC Agent's Agreement is
terminated.
IT SHALL BE EXPRESSLY UNDERSTOOD BY THE FIELD REPRESENTATIVE THAT THIS AGREEMENT
SHALL NOT BE EFFECTIVE UNLESS THE FIELD REPRESENTATIVE IS VALIDLY LICENSED IN
ACCORDANCE WITH THE REQUIREMENTS OF THE JURISDICTIONS WHERE SOLICITATIONS FOR
PAL AND VUL POLICIES OCCUR.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
---------------------------- -------------------------------
WITNESS PRINCIPAL
---------------------------- -------------------------------
WITNESS FIELD REPRESENTATIVE
3
APPENDIX A
A. FR Compensation Schedule
--------------------------------------------------------------------------------
LPC Factor on Unscheduled Payments Unscheduled Payments
Policy Years Policy Premiums 1985 Version FRs 1956/1967 Version FRs
--------------------------------------------------------------------------------
1 36 3.5% 3%
--------------------------------------------------------------------------------
2 through 10 * 3.5% 3%
--------------------------------------------------------------------------------
*Renewal compensation for preceding employment years on PAL policy premiums
shall be the same as set forth in the Field Representatives Plan manuals for
existing Plan versions (except that the rates applicable under Part A shall be
50% of standard rates, and in the case of the PAL `95 product only, Part C shall
be entirely replaced by Part D as outlined below for those Field Representatives
belonging to the 1985 FR Plan version). FR Plan compensation factors shall
operate in accordance with the effective date of the Guardian Life FR Agreement.
The first policy year LPC factor of 36 on policy premiums shall be reduced where
policies are issued at ages over 70 with actual rates payable determined by
deducting from the figure 106 ages of applicable insureds as of policy issue
dates.
No compensation shall be payable on PAL policy premiums skipped under the
Premium Skip Option of PAL policies. If unscheduled payments are received when
policies should be on the Premium Skip Option, renewal compensation on such
payments shall be calculated at 5% and applied up to amounts of premium that
correspond to renewal PAL policy premiums that would otherwise have been paid if
not for the Premium Skip Option being in effect with standard renewal rates on
unscheduled payments applied to any premiums received above such PAL policy
premium levels.
B. First Policy Year Compensation Chargebacks on PAL `95 Policies
Basic first policy year compensation on policy premiums at $13.75 per thousand
of life production credits shall be charged back to Field Representatives on PAL
`95 policies that are surrendered or lapsed prior to the policies having been in
force for at least eighteen months in accordance with the following:
4
APPENDIX A (CONTINUED)
--------------------------------------------------------------------------------
Policy Months of PAL '95 Chargeback Percentages Chargeback Percentages
Surrenders or Lapses 1956/1967 Version FRs 1985 Version FRs
--------------------------------------------------------------------------------
1-3 75% 82%
--------------------------------------------------------------------------------
4-6 70% 77%
--------------------------------------------------------------------------------
7-10 65% 71%
--------------------------------------------------------------------------------
11-13 55% 60%
--------------------------------------------------------------------------------
14 50% 55%
--------------------------------------------------------------------------------
15 40% 44%
--------------------------------------------------------------------------------
16 30% 33%
--------------------------------------------------------------------------------
17 20% 22%
--------------------------------------------------------------------------------
18 10% 11%
--------------------------------------------------------------------------------
5
APPENDIX B
A. FR Compensation Schedule
--------------------------------------------------
LPC Factor on
Policy Years Target Premiums Excess Premiums
--------------------------------------------------
1 33 3.5%
--------------------------------------------------
2 through 10 * 3.5%
--------------------------------------------------
*3.5% policy years two through ten and 2.0% policy years eleven and over
credited as Commission Equivalent Compensation (PGF)
VUL compensation shall cease at termination except in the event of retirement in
accordance with Section II, Subsection K, Paragraph 1 of the Field
Representatives' Plan or possibly in the event of death in accordance with
Section II, Subsection L, Paragraph 1 of the Field Representatives' Plan.
6
APPENDIX C
ALLOCATION OF PREMIUMS AND THEIR EFFECT ON COMPENSATION
A. General
In a first policy year, premiums will first be applied to policy target
premium. These will be compensated at first year rates. Any premiums
received in the first year of a policy exceeding policy target premium
will be considered excess premium to be compensated at excess rates.
In policy years 2 through 10, any premium received up to nine times policy
target premium will be applied as policy target premium and receive
compensation at target premium renewal rates. Any premium exceeding nine
times policy target premium in policy years two through ten will be
considered excess premium to be compensated at excess rates.
In policy years 11 and greater, the compensation on premium received will
be at service fee rates.
B. Increases In Coverage
Coverage increases will be reflected in self-contained segments of
policies that have their own policy effective dates, policy year durations
and policy premiums. Premiums for policies with increases in coverage will
be applied to each coverage and associated target premiums in the order
the coverages were issued (earliest first). When the sum of the premiums
during a given policy year exceeds the sum of all applicable target
premiums, any additional amount will be allocated prorata based on target
premiums for each coverage. The amount thus allocated will be processed as
outlined in the above general description (i.e. it will be processed with
reference to policy years of the coverages and amounts of applicable
target premiums paid).
C. Decreases In Coverage
A coverage decrease will be applied to a last previous coverage increase,
if any, or to the initial coverage should no coverage increase have taken
place. Such decrease will serve to reduce target premium for the full
period so that any regular compensation on subsequent premium received
will be based on lower target premium (i.e. The total of renewal
compensation payable will be based on nine
7
APPENDIX C (CONTINUED)
times the lower target premium). Any premium amount applied over such
lower target premium will be compensated at excess rates for policy years
2 through 10 and at service fee rates for policy years 11 and greater.
First year compensation will be paid on coverage increases only to the
extent such increases should exceed previous coverage decreases.
8
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
BROKERAGE AGREEMENT
Agreement made this _________ day of ________ by and between ___________________
("Principal") and __________________ ("Broker").
1. The undersigned is presently a Broker in accordance with a Brokerage
Agreement ("Guardian Life Broker Agreement") with the Principal
named above, endorsed by The Guardian Life Insurance Company of
America ("Guardian Life") and bearing an effective date of
_________________.
2. The Principal hereby appoints the Broker with the endorsement of The
Guardian Insurance & Annuity Company, Inc. (GIAC), a Delaware
Corporation and a wholly-owned subsidiary of Guardian Life, for the
limited purpose of soliciting applications for GIAC's Variable Whole
Life Insurance Policies with Modified Scheduled Premiums marketed
under the name Park Avenue Life ("PAL") and GIAC's Flexible Premium
Variable Universal Life Policies marketed under the name Park Avenue
VUL ("VUL"). There may be one or more policies marketed under the
PAL name. Where necessary or appropriate, this Agreement will
distinguish between them by appending the year of introduction.
Currently, there are two policies marketed under this name - "PAL
`95 and PAL `97."
3. The Broker shall at all times be associated with Guardian Investor
Services Corporation ("GISC"), a Broker-Dealer registered with the
Securities and Exchange Commission ("SEC") and a member of the
National Association of Securities Dealers, Inc. ("NASD") as an NASD
Registered Representative or NASD Registered Principal and, if the
particular jurisdiction requires, shall be licensed or registered as
a securities agent of GISC. The Broker must at all times be validly
licensed, registered or appointed by GIAC as a variable contracts
agent in accordance with the requirements of the jurisdiction where
solicitations for PAL and VUL contracts occur. The Broker may
solicit for and sell PAL and VUL contracts in any jurisdiction where
such contracts are filed and approved for sale by the governmental
authorities having jurisdiction, provided the Broker is validly
licensed, registered or otherwise qualified as required for the
solicitation and sale of the PAL and VUL contracts in such
jurisdictions.
1
4. To the extent applicable, the Broker shall comply strictly with :
(a) the laws, rules and regulations of all jurisdictions (state and
local) in which the Broker solicits applications for and sells PAL
and VUL contracts; (b) federal laws and the rules, regulations of
the SEC; (c) the rules of the NASD; (d) the rules and procedures of
GISC, and (e) the rules and procedures of GIAC. The Broker
understands that failure to comply with such laws, rules,
regulations and procedures may result in disciplinary action against
the Broker by the SEC, a state or other local regulatory agency that
has jurisdiction, the NASD, GISC and GIAC. Before any solicitations
or sales of PAL and VUL are made, the Broker shall become familiar
with and abide by the laws, rules, regulations and procedures of all
of the above mentioned agencies or parties as are currently in
effect and as they may be changed from time to time.
5. The Broker shall have all applications for PAL and VUL accurately
completed or reviewed and signed by the applicant and shall submit
the applications to GIAC through GISC together with all payments
received from applicants without any reductions. The Broker shall
cause all checks or orders for PAL and VUL to be made payable to
GIAC. GIAC shall reject any application that is submitted by or on
behalf of a Broker not appropriately licensed as required by
paragraph 3 of this Agreement.
6. The Broker shall not make any statements concerning PAL and VUL
except those that are contained in the current prospectuses for PAL
and VUL and the prospectuses for their underlying variable
investment options and shall not solicit for applications or make
sales through the use of mailings, advertisements or sales
literature or any other method of contact unless the material or a
complete description of the method has been filed with the NASD and
received written Approval of GISC from a Registered Principal whose
office is located in a GISC Office of Supervisory Jurisdiction as
that term is defined by NASD rules.
7. In connection with the Broker's appointment for the purpose set
forth in paragraph 2 above, the entire Guardian Life Broker
Agreement referred to above and attached hereto as the Exhibit,
including all compensation adjustment and service fee provisions, is
incorporated herein by reference. All references to "Company"
2
within the Guardian Life Broker Agreement shall apply with full
force and effect to GIAC. Additionally, the Registered
Representative's Agreement between the Broker and GISC and the
Agent's Agreement between the Broker and GIAC are incorporated
herein by reference and attached hereto as Exhibits.
8. The Broker shall be paid commissions on PAL as outlined in Appendix
A of this Agreement.
9. The Broker shall be paid commissions on VUL as outlined in Appendix
B of this Agreement.
10. Allocation of VUL premiums and the effect thereof on compensation is
described in Appendix C of this Agreement.
11. It shall be understood that this Agreement is automatically
terminated if the Guardian Life Broker Agreement, GISC Registered
Representative Agreement or GIAC Agent's Agreement is terminated.
IT SHALL BE EXPRESSLY UNDERSTOOD BY THE BROKER THAT THIS AGREEMENT SHALL NOT BE
EFFECTIVE UNLESS THE BROKER IS VALIDLY LICENSED IN ACCORDANCE WITH THE
REQUIREMENTS OF THE JURISDICTIONS WHERE SOLICITATIONS FOR PAL AND VUL POLICIES
OCCUR.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
---------------------------- -------------------------------
WITNESS PRINCIPAL
---------------------------- -------------------------------
WITNESS BROKER
3
APPENDIX A
A. Commission Schedule (Percentages of Premium)
------------------------------------------------------
Policy Years Policy Premiums Unscheduled Payments
------------------------------------------------------
1 50% 3%
------------------------------------------------------
2 through 10 5% 3%
------------------------------------------------------
The first policy year commission rate of 50% on policy premiums shall be reduced
where policies are issued at ages over 70 with actual rates payable determined
by deducting from the figure 120 ages of applicable insureds as of policy issue
dates.
No compensation shall be payable on PAL policy premiums skipped under the
Premium Skip Option of PAL policies. If unscheduled payments are received when
policies should be on the Premium Skip Option, renewal commissions on such
payments shall be based on renewal rates of PAL policy premiums applied up to
amounts of premium that correspond to renewal PAL policy premiums that would
otherwise have been paid if not for the Premium Skip Option being in effect with
standard renewal rates on unscheduled payments applied to any premiums received
above such PAL policy premium levels.
B. First Policy Year Commission Chargebacks on PAL `95 Policies
First policy year commissions on policy premiums shall be charged back to the
Broker on PAL `95 policies that are surrendered or lapsed prior to the policies
having been in force for at least eighteen months in accordance with the
following:
------------------------------------------------------------------------
Policy Months of PAL x00 Xxxxxxxxxx or Lapses Chargeback Percentages
------------------------------------------------------------------------
1-3 75%
------------------------------------------------------------------------
4-6 70%
------------------------------------------------------------------------
7-10 65%
------------------------------------------------------------------------
11-13 55%
------------------------------------------------------------------------
14 50%
------------------------------------------------------------------------
15 40%
------------------------------------------------------------------------
16 30%
------------------------------------------------------------------------
17 20%
------------------------------------------------------------------------
18 10%
------------------------------------------------------------------------
4
APPENDIX A (CONTINUED)
PAL chargebacks not immediately repaid on demand by the Broker to the Principal
(or to the Company if the Company should be the Principal) shall constitute an
indebtedness under the terms of the Guardian Life Broker Agreement.
5
APPENDIX B
A. Commission Schedule (Percentages of Premium)
--------------------------------------------------
Policy Years Target Premiums Excess Premiums
--------------------------------------------------
1 45% 3%
--------------------------------------------------
2 through 10 3% 3%
--------------------------------------------------
6
APPENDIX C
ALLOCATION OF PREMIUMS AND THEIR EFFECT ON COMPENSATION
A. General
In a first policy year, premiums will first be applied to policy target
premium. These will be compensated at first year rates. Any premiums
received in the first year of a policy exceeding policy target premium
will be considered excess premium to be compensated at excess rates.
In policy years 2 through 10, any premium received up to nine times policy
target premium will be applied as policy target premium and receive
compensation at target premium renewal rates. Any premium exceeding nine
times policy target premium in policy years two through ten will be
considered excess premium to be compensated at excess rates.
In policy years 11 and greater, the compensation on premium received will
be at service fee rates.
B. Increases In Coverage
Coverage increases will be reflected in self-contained segments of
policies that have their own policy effective dates, policy year durations
and policy premiums. Premiums for policies with increases in coverage will
be applied to each coverage and associated target premiums in the order
the coverages were issued (earliest first). When the sum of the premiums
during a given policy year exceeds the sum of all applicable target
premiums, any additional amount will be allocated prorata based on target
premiums for each coverage. The amount thus allocated will be processed as
outlined in the above general description (i.e. it will be processed with
reference to policy years of the coverages and amounts of applicable
target premiums paid).
C. Decreases In Coverage
A coverage decrease will be applied to a last previous coverage increase,
if any, or to the initial coverage should no coverage increase have taken
place. Such
7
APPENDIX C (CONTINUED)
decrease will serve to reduce target premium for the full period so that
any regular compensation on subsequent premium received will be based on
lower target premium (i.e. The total of renewal compensation payable will
be based on nine times the lower target premium). Any premium amount
applied over such lower target premium will be compensated at excess rates
for policy years 2 through 10 and at service fee rates for policy years 11
and greater.
First year compensation will be paid on coverage increases only to the
extent such increases should exceed previous coverage decreases.
8
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
MEMORANDUM OF AGREEMENT
Agreement made this _________ day of ____________, 19___ by and between The
Guardian Insurance & Annuity Company, Inc. ("GIAC"), a Delaware corporation and
a wholly-owned subsidiary of The Guardian Life Insurance Company of America
("Guardian Life"), having its Principal office located at 000 Xxxx Xxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000 and ________________ ("AGENT").
1. The undersigned Agent is presently a Career Development Manager ("CDM") of
Guardian Life in accordance with a Memorandum of Agreement bearing an
effective date of _______________ ("Guardian Life CDM Agreement").
2. GIAC hereby appoints the Agent CDM of GIAC for the limited purpose of
conducting and overseeing the business relating to GIAC's Variable Whole
Life Insurance Policies with Modified Scheduled Premiums marketed under
the name Park Avenue Life ("PAL") and GIAC's Flexible Premium Variable
Universal Life policy marketed under the name Park Avenue VUL ("VUL").
There may be one or more policies marketed under the PAL name and, where
necessary or appropriate, this Agreement will distinguish between them by
appending the year of introduction. Currently, there are two policies
marketed under this name -- "PAL `95 and PAL `97."
3. The CDM shall at all times be associated with Guardian Investor Services
Corporation ("GISC"), a Broker-Dealer registered with the Securities and
Exchange Commission ("SEC") and a member of the National Association of
Securities Dealers, Inc. ("NASD") as an NASD Registered Representative or
NASD Registered Principal and, if the particular jurisdiction requires,
shall be licensed or registered as a securities agent of GISC. The CDM
must at all times be validly licensed, registered or appointed by GIAC as
a variable contracts agent in accordance with the requirements of the
jurisdiction where solicitations for PAL and VUL contracts occur. The CDM,
his agents, brokers and Field Representatives may solicit for and sell PAL
and VUL contracts in any jurisdiction where such contracts are filed and
approved for sale by the governmental authorities having jurisdiction,
provided the CDM, his agents, brokers and Field Representatives are all
validly licensed, registered or otherwise qualified as required for the
solicitation and sale of the PAL and VUL contracts in such jurisdictions.
1
4. To the extent applicable, the CDM shall comply strictly with: (a) the
laws, rules and regulations of all jurisdictions (state and local) in
which the CDM, his agents, brokers and Field Representatives solicit
applications for and sell PAL and VUL contracts; (b) federal laws and the
rules and regulations of the SEC; (c) the rules of the NASD; (d) the rules
and procedures of GISC, and (e) the rules and procedures of GIAC. The CDM
understands that failure to comply with such laws, rules, regulations and
procedures may result in disciplinary action against the CDM by the SEC, a
state or other local regulatory agency that has jurisdiction, the NASD,
GISC or GIAC. Before any solicitations or sales of PAL and VUL are made,
the CDM shall become familiar with and abide by the laws, rules,
regulations and procedures of all the above mentioned agencies or parties
as are currently in effect and as they may be changed from time to time.
5. The CDM shall have all applications for PAL and VUL accurately completed
or reviewed and signed by the applicant and shall submit the applications
to GIAC through GISC together with all payments received from applicants
without any reductions. The CDM, his agents, brokers and Field
Representatives shall cause all checks or orders for PAL and VUL to be
made payable to GIAC. GIAC shall reject any application that is submitted
by or on behalf of a CDM, his agents, brokers and Field Representatives
not appropriately licensed as required by paragraph 3 of this Agreement.
6. The CDM, his agents, brokers and Field Representatives shall not make any
statements concerning PAL and VUL except those that are contained in the
current prospectuses for PAL and VUL and the prospectuses for their
underlying variable investment options and they shall not solicit for
applications or make sales through the use of mailings, advertisements or
sales literature or any other method of contact unless the material or a
complete description of the method has been filed wit the NASD and
received written approval of GISC from a Registered Principal whose office
is located in a GISC Office of Supervisory Jurisdiction as that term is
defined by NASD rules.
7. In connection with the agent's appointment as a GIAC CDM for the purpose
set forth in paragraph 2 above, the entire Guardian Life CDM Agreement
referred to above and attached hereto as the Exhibit, including all
compensation adjustment provisions, is incorporated herein by reference.
Guardian Life CDM Agreement compensation provisions that do not apply to
PAL and VUL are as noted below. All references to "Company" within the
Guardian Life CDM Agreement shall apply with full force and effect to
GIAC. Additionally, the Registered Representative's Agreement between the
CDM and GISC and the
2
Agent's Agreement between the CDM and GIAC are incorporated herein by
reference and attached hereto as Exhibits.
8. The CDM shall be paid additional compensation as outlined in Appendix A of
this Agreement and shall be paid commissions on personally produced PAL
and VUL business as outlined in Appendix B of this Agreement. Allocation
of VUL premiums and the effect thereof on compensation is described in
Appendix C of this Agreement.
9. The CDM shall be responsible to the Company for any indebtedness that may
have resulted from PAL chargebacks applied to PAL business personally
produced the CDM.
10. This Agreement may be terminated as outlined in Section IV of the Guardian
Life CDM Agreement. In addition, it shall be automatically terminated if
the Guardian Life CDM Agreement, GISC Registered Representative Agreement
or GIAC Agent's Agreement is terminated.
IT SHALL BE EXPRESSLY UNDERSTOOD BY THE AGENT THAT THIS AGREEMENT SHALL NOT BE
EFFECTIVE UNLESS THE AGENT IS VALIDLY LICENSED IN ACCORDANCE WITH THE
REQUIREMENTS OF THE JURISDICTIONS WHERE SOLICITATIONS BY THE CDM AND THE AGENTS,
BROKERS AND FIELD REPRESENTATIVES OF THE CDM FOR PAL AND VUL POLICIES OCCUR.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
as of the day and year first written above.
---------------------------- -------------------------------
WITNESS Xxxx X. Xxxxx
---------------------------- -------------------------------
WITNESS Career Development Manager
3
APPENDIX A
A. CDM Additional Compensation (Percentages of First Year Premium)
---------------------------------------------------------
Type Rate
---------------------------------------------------------
PAL Policy Premiums 20%
---------------------------------------------------------
VUL Target Premiums 19%
---------------------------------------------------------
PAL Unscheduled Payments & VUL Excess Premiums 1%
---------------------------------------------------------
Section IIIB, Paragraph (K) Additional
Compensation 30%
---------------------------------------------------------
B. CDM Additional Compensation Chargebacks on PAL `95 Policies
Additional compensation on policy premiums shall be charged back to the CDM on
PAL `95 policies that are surrendered or lapsed prior to the policies having
been in force for at least 18 months in accordance with the following:
-----------------------------------------------------------------------
Policy Months of PAL x00 Xxxxxxxxxx or Lapses Chargeback Percentages
-----------------------------------------------------------------------
1-3 75%
-----------------------------------------------------------------------
4-6 70%
-----------------------------------------------------------------------
7-10 65%
-----------------------------------------------------------------------
11-13 55%
-----------------------------------------------------------------------
14 50%
-----------------------------------------------------------------------
15 40%
-----------------------------------------------------------------------
16 30%
-----------------------------------------------------------------------
17 20%
-----------------------------------------------------------------------
18 10%
-----------------------------------------------------------------------
4
APPENDIX B
A. Commission Schedule (Percentages of Premium)
-----------------------------------------------------------------------
PAL Unscheduled
PAL Policy VUL Target Payments & VUL
Policy Years Premiums Premiums Excess Premiums
-----------------------------------------------------------------------
1 50% 45% 3%
-----------------------------------------------------------------------
2 through 10 5% 3% 3%
-----------------------------------------------------------------------
The first policy year commission rates of 50% on PAL and 45% on VUL shall be
reduced where policies are issued at ages over 70 with actual rates payable
determined by deducting from the figure 120 ages of applicable insureds as of
policy issue dates on PAL polices and by deducting from the figure 115 ages of
applicable insureds as of policy issue dates on VUL policies.
No compensation shall be payable on PAL policy premiums skipped under the
Premium Skip Option of PAL policies. If unscheduled payments are received when
policies should be on the Premium Skip Option, renewal commissions on such
payments shall be based on renewal rates of PAL policy premiums applied up to
amounts of premium that correspond to renewal PAL policy premiums that would
otherwise have been paid if not for the Premium Skip Option being in effect with
standard renewal rates on unscheduled payments applied to any premiums received
above such PAL policy premium levels.
B. First Policy Year Commission Chargebacks on PAL `95 Policies
First policy year commissions on policy premiums shall be charged back to the
Agent on PAL `95 policies that are surrendered or lapsed prior to the policies
having been in force for at least 18 months in accordance with the following:
---------------------------------------------------------------------
Policy Months of PAL x00 Xxxxxxxxxx or Lapses Chargeback Percentages
---------------------------------------------------------------------
1-3 75%
---------------------------------------------------------------------
4-6 70%
---------------------------------------------------------------------
7-10 65%
---------------------------------------------------------------------
11-13 55%
---------------------------------------------------------------------
14 50%
---------------------------------------------------------------------
15 40%
---------------------------------------------------------------------
16 30%
---------------------------------------------------------------------
17 20%
---------------------------------------------------------------------
18 10%
---------------------------------------------------------------------
5
APPENDIX C
ALLOCATION OF PREMIUMS AND THEIR EFFECT ON COMPENSATION
A. General
In a first policy year, premiums will first be applied to policy target
premium. These will be compensated at first year rates. Any premiums
received in the first year of a policy exceeding policy target premium
will be considered excess premium to be compensated at excess rates.
In policy years 2 through 10, any premium received up to nine times policy
target premium will be applied as policy target premium and receive
compensation at target premium renewal rates. Any premium exceeding nine
times policy target premium in policy years two through ten will be
considered excess premium to be compensated at excess rates.
In policy years 11 and greater, the compensation on premium received will
be at service fee rates.
B. Increases In Coverage
Coverage increases will be reflected in self-contained segments of
policies that have their own policy effective dates, policy year durations
and policy premiums. Premiums for policies with increases in coverage will
be applied to each coverage and associated target premiums in the order
the coverages were issued (earliest first). When the sum of the premiums
during a given policy year exceeds the sum of all applicable target
premiums, any additional amount will be allocated prorata based on target
premiums for each coverage. The amount thus allocated will be processed as
outlined in the above general description (i.e. it will be processed with
reference to policy years of the coverages and amounts of applicable
target premiums paid).
C. Decreases In Coverage
A coverage decrease will be applied to a last previous coverage increase,
if any, or to the initial coverage should no coverage increase have taken
place. Such decrease will serve to reduce target premium for the full
period so that any regular compensation on subsequent premium received
will be based on
APPENDIX C (CONTINUED)
lower target premium (i.e. The total of renewal compensation payable will
be based on nine times the lower target premium). Any premium amount
applied over such lower target premium will be compensated at excess rates
for policy years 2 through 10 and at service fee rates for policy years 11
and greater.
First year compensation will be paid on coverage increases only to the
extent such increases should exceed previous coverage decreases.
7
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
AGREEMENT OF GENERAL AGENCY
Agreement made this _________ day of ____________, 19___ by and between The
Guardian Insurance & Annuity Company, Inc. ("GIAC"), a Delaware corporation and
a wholly-owned subsidiary of The Guardian Life Insurance Company of America
("Guardian Life"), having its Principal office located at 000 Xxxx Xxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000 and ________________ ("Principal").
1. The undersigned Principal is presently a General Agent of Guardian Life in
accordance with an Agreement of General Agency bearing an effective date
of _______________ ("Guardian Life GA Agreement").
2. GIAC hereby appoints the Principal a General Agent of GIAC for the limited
purpose of conducting and overseeing the business relating to GIAC's
Variable Whole Life Insurance Policies with Modified Scheduled Premiums
marketed under the name Park Avenue Life ("PAL") and GIAC's Flexible
Premium Variable Universal Life policy marketed under the name Park Avenue
VUL ("VUL"). There may be one or more policies marketed under the PAL name
and, where necessary or appropriate, this Agreement will distinguish
between them by appending the year of introduction. Currently, there are
two policies marketed under this name - "PAL `95 and PAL `97."
3. The Principal shall at all times be associated with Guardian Investor
Services Corporation ("GISC"), a Broker-Dealer registered with the
Securities and Exchange Commission ("SEC") and a member of the National
Association of Securities Dealers, Inc. ("NASD") as an NASD Registered
Representative or NASD Registered Principal and, if the particular
jurisdiction requires, shall be licensed or registered as a securities
agent of GISC. The Principal must at all times be validly licensed,
registered or appointed by GIAC as a variable contracts agent in
accordance with the requirements of the jurisdiction where solicitations
for PAL and VUL contracts occur. The Principal, his agents, brokers and
Field Representatives may solicit for and sell PAL and VUL contracts in
any jurisdiction where such contracts are filed and approved for sale by
the governmental authorities having jurisdiction, provided the Principal,
his agents, brokers and Field Representatives are all validly licensed,
registered or otherwise qualified as required for the solicitation and
sale of the PAL and VUL contracts in such jurisdictions.
4. To the extent applicable, the Principal shall comply strictly with: (a)
the laws, rules and regulations of all jurisdictions (state and local) in
which
1
the Principal, his agents, brokers and Field Representatives solicit
applications for and sell PAL and VUL contracts; (b) federal laws and the
rules and regulations of the SEC; (c) the rules of the NASD; (d) the rules
and procedures of GISC, and (e) the rules and procedures of GIAC. The
Principal understands that failure to comply with such laws, rules,
regulations and procedures may result in disciplinary action against the
Principal by the SEC, a state or other local regulatory agency that has
jurisdiction, the NASD, GISC or GIAC. Before any solicitations or sales of
PAL and VUL are made, the Principal shall become familiar with and abide
by the laws, rules, regulations and procedures of all the above mentioned
agencies or parties as are currently in effect and as they may be changed
from time to time.
5. The Principal shall have all applications for PAL and VUL accurately
completed or reviewed and signed by the applicant and shall submit the
applications to GIAC through GISC together with all payments received from
applicants without any reductions. The Principal, his agents, brokers and
Field Representatives shall cause all checks or orders for PAL and VUL to
be made payable to GIAC. GIAC shall reject any application that is
submitted by or on behalf of a Principal, his agents, brokers and Field
Representatives not appropriately licensed as required by paragraph 3 of
this Agreement.
6. The Principal, his agents, brokers and Field Representatives shall not
make any statements concerning PAL and VUL except those that are contained
in the current prospectuses for PAL and VUL and the prospectuses for their
underlying variable investment options and they shall not solicit for
applications or make sales through the use of mailings, advertisements or
sales literature or any other method of contact unless the material or a
complete description of the method has been filed with the NASD and
received written approval of GISC from a Registered Principal whose office
is located in a GISC Office of Supervisory Jurisdiction as that term is
defined by NASD rules.
7. In connection with the Principal's appointment as a GIAC General Agent for
the purpose set forth in paragraph 2 above, the entire Guardian Life GA
Agreement referred to above and attached hereto as the Exhibit, including
all compensation adjustment provisions, is incorporated herein by
reference. Guardian Life GA Agreement compensation provisions that do not
apply to PAL and VUL are as noted below. All references to "Company"
within the Guardian Life GA Agreement shall apply with full force and
effect to GIAC. Additionally, the Registered Representative's Agreement
between the Principal and GISC and the Agent's Agreement between the
Principal and GIAC are incorporated herein by reference and attached
hereto as Exhibits.
2
8. The Principal shall be paid overriding commissions for sales of PAL and
VUL policies as outlined in Appendix A of this Agreement.
9. Expense Allowance Payment ("EAP") provisions contained in Section 4 and
Appendix G of the Guardian Life GA Agreement shall not apply to PAL and
VUL (except for the use of PAL and VUL first year commissions on policy
premiums in determining the rate that will apply to non-PAL business in
accordance with the provisions contained in Appendix G, Schedule G-II, (B)
2). The Principal shall instead receive EAP on PAL and VUL as outlined in
Appendix B of this Agreement.
10. The Principal shall be paid commissions on personally produced PAL and VUL
business as outlined in Appendix C of this Agreement .
11. Allocation of VUL premiums and the effect thereof on compensation is
described in Appendix D of this Agreement.
12. The Principal shall be responsible to the Company for any indebtedness
resulting from PAL chargebacks applied to PAL business personally produced
by the Principal and to PAL business produced by the agents, brokers and
Field Representatives of the Principal.
13. This Agreement may be terminated as outlined in Section 5 of the Guardian
Life GA Agreement. In addition, it shall be automatically terminated if
the Guardian Life GA Agreement, GISC Registered Representative Agreement
or GIAC Agent's Agreement is terminated.
IT SHALL BE EXPRESSLY UNDERSTOOD BY THE PRINCIPAL THAT THIS AGREEMENT SHALL NOT
BE EFFECTIVE UNLESS THE PRINCIPAL IS VALIDLY LICENSED IN ACCORDANCE WITH THE
REQUIREMENTS OF THE JURISDICTIONS WHERE SOLICITATIONS BY THE PRINCIPAL AND THE
AGENTS, BROKERS AND FIELD REPRESENTATIVES OF THE PRINCIPAL FOR PAL AND VUL
POLICIES OCCUR.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
as of the day and year first written above.
------------------------ ------------------------------
WITNESS Xxxx X. Xxxxx
------------------------ ------------------------------
WITNESS General Agent
3
APPENDIX A
A. Overriding Commission Schedule (Percentages of Premium)
--------------------------------------------------------------------------
PAL Unscheduled
Payments & VUL
Policy Years PAL Policy Premiums VUL Target Premiums Excess Premiums
--------------------------------------------------------------------------
1 5% 5% 0.5%
--------------------------------------------------------------------------
2 through 5 4% 3% 0.5%
--------------------------------------------------------------------------
6 through 10 2% 3% 0.5%
--------------------------------------------------------------------------
No overrides on PAL policies shall be payable on PAL policy premiums skipped
under the Premium Skip Option of the PAL policy. If unscheduled payments are
received when policies should be on the Premium Skip Option, renewal overrides
on such payments shall be based on renewal rates of PAL policy premiums applied
up to amounts of premium that correspond to renewal PAL policy premiums that
would otherwise have been paid if not for the Premium Skip Option being in
effect with standard renewal rates on unscheduled payments applied to any
premiums received above such PAL policy premium levels.
B. First Policy Year Overriding Commission Chargebacks on PAL `95 Policies
First policy year overriding commissions on policy premiums shall be charged
back to the Principal on PAL `95 policies that are surrendered or lapsed prior
to the policies having been in force for at least 18 months in accordance with
the following:
---------------------------------------------------------------------
Policy Months of PAL x00 Xxxxxxxxxx or Lapses Chargeback Percentages
---------------------------------------------------------------------
1-3 75%
---------------------------------------------------------------------
4-6 70%
---------------------------------------------------------------------
7-10 65%
---------------------------------------------------------------------
11-13 55%
---------------------------------------------------------------------
14 50%
---------------------------------------------------------------------
15 40%
---------------------------------------------------------------------
16 30%
---------------------------------------------------------------------
17 20%
---------------------------------------------------------------------
18 10%
---------------------------------------------------------------------
4
APPENDIX B
A. Expense Allowance Payments (Percentages of First Year Commissions)
------------------
Product Rate
------------------
PAL 62%
------------------
VUL 69%
------------------
The term "first year commissions" shall be understood to include first policy
year Field Representative compensation at $13.75 per 1,000 of life production
credits.
B. First Policy Year EAP Chargebacks on PAL `95 Policies
EAP on policy premiums shall be charged back to the Principal on PAL `95
policies that are surrendered or lapsed prior to the policies having been in
force for at least 18 months in accordance with the following:
------------------------------------------------------------------------
Policy Months of PAL x00 Xxxxxxxxxx or Lapses Chargeback Percentages
------------------------------------------------------------------------
1-3 75%
------------------------------------------------------------------------
4-6 70%
------------------------------------------------------------------------
7-10 65%
------------------------------------------------------------------------
11-13 55%
------------------------------------------------------------------------
14 50%
------------------------------------------------------------------------
15 40%
------------------------------------------------------------------------
16 30%
------------------------------------------------------------------------
17 20%
------------------------------------------------------------------------
18 10%
------------------------------------------------------------------------
5
APPENDIX C
A. Commission Schedule (Percentages of Premium)
-------------------------------------------------------------------------
Policy Years PAL Policy VUL Target PAL Unscheduled
Premiums Premiums Payments & VUL
Excess Premiums
-------------------------------------------------------------------------
1 50% 45% 3%
-------------------------------------------------------------------------
2 through 10 5% 3% 3%
-------------------------------------------------------------------------
The first policy year commission rates of 50% on PAL and 45% on VUL shall be
reduced where policies are issued at ages over 70 with actual rates payable
determined by deducting from the figure 120 ages of applicable insureds as of
policy issue dates on PAL polices and by deducting from the figure 115 ages of
applicable insureds as of policy issue dates on VUL policies.
No compensation shall be payable on PAL policy premiums skipped under the
Premium Skip Option of PAL policies. If unscheduled payments are received when
policies should be on the Premium Skip Option, renewal commissions on such
payments shall be based on renewal rates of PAL policy premiums applied up to
amounts of premium that correspond to renewal PAL policy premiums that would
otherwise have been paid if not for the Premium Skip Option being in effect with
standard renewal rates on unscheduled payments applied to any premiums received
above such PAL policy premium levels.
B. First Policy Year Commission Chargebacks on PAL `95 Policies
First policy year commissions on policy premiums shall be charged back to the
Agent on PAL `95 policies that are surrendered or lapsed prior to the policies
having been in force for at least 18 months in accordance with the following:
---------------------------------------------------------------------
Policy Months of PAL x00 Xxxxxxxxxx or Lapses Chargeback Percentages
---------------------------------------------------------------------
1-3 75%
---------------------------------------------------------------------
4-6 70%
---------------------------------------------------------------------
7-10 65%
---------------------------------------------------------------------
11-13 55%
---------------------------------------------------------------------
14 50%
---------------------------------------------------------------------
15 40%
---------------------------------------------------------------------
16 30%
---------------------------------------------------------------------
17 20%
---------------------------------------------------------------------
18 10%
---------------------------------------------------------------------
6
APPENDIX D
ALLOCATION OF PREMIUMS AND THEIR EFFECT ON COMPENSATION
A. General
In a first policy year, premiums will first be applied to policy target
premium. These will be compensated at first year rates. Any premiums
received in the first year of a policy exceeding policy target premium
will be considered excess premium to be compensated at excess rates.
In policy years 2 through 10, any premium received up to nine times policy
target premium will be applied as policy target premium and receive
compensation at target premium renewal rates. Any premium exceeding nine
times policy target premium in policy years two through ten will be
considered excess premium to be compensated at excess rates.
In policy years 11 and greater, the compensation on premium received will
be at service fee rates.
B. Increases In Coverage
Coverage increases will be reflected in self-contained segments of
policies that have their own policy effective dates, policy year durations
and policy premiums. Premiums for policies with increases in coverage will
be applied to each coverage and associated target premiums in the order
the coverages were issued (earliest first). When the sum of the premiums
during a given policy year exceeds the sum of all applicable target
premiums, any additional amount will be allocated prorata based on target
premiums for each coverage. The amount thus allocated will be processed as
outlined in the above general description (i.e. it will be processed with
reference to policy years of the coverages and amounts of applicable
target premiums paid).
C. Decreases In Coverage
A coverage decrease will be applied to a last previous coverage increase,
if any, or to the initial coverage should no coverage increase have taken
place. Such decrease will serve to reduce target premium for the full
period so that any regular compensation on subsequent premium received
will be
7
APPENDIX D (CONTINUED)
based on lower target premium (i.e. The total of renewal compensation
payable will be based on nine times the lower target premium). Any premium
amount applied over such lower target premium will be compensated at
excess rates for policy years 2 through 10 and at service fee rates for
policy years 11 and greater.
First year compensation will be paid on coverage increases only to the
extent such increases should exceed previous coverage decreases.
8
